COVID-19 has brought unprecedented change and uncertainty into our lives and raised a number of questions for business-owners. For example, can a business be held liable if a patron or employee contracts COVID-19 while at their premises, despite the business’ good-faith efforts to prevent its transmission? What can be done to protect businesses from this potential liability? To date, British Columbia, New Brunswick, and Ontario have introduced COVID-related legislation to protect persons (including corporations and other entities) who, despite taking appropriate precautions and adhering to health guidelines, exposed individuals to COVID-19. However, to date, the remaining Canadian jurisdictions have not implemented similar legislation. In light of the uncertainties surrounding liability exposure, many businesses have implemented waivers, indemnities, and acknowledgement of risk forms. This article will outline best practices for drafting and implementing these forms, explain some of the issues regarding enforceability of these forms, and recommend a few ways in which businesses can avoid these pitfalls.
Ontario, New Brunswick and British Columbia Legislation:
Ontario recently implemented the Supporting Ontario’s Recovery and Municipal Elections Act. This Act prevents individuals from suing “persons” who, despite taking precautions, exposed or infected others with COVID-19. “Persons” is defined to include individuals, corporations or other entities including the Crown (s. 1(2)). The Act has retroactive effect, and any proceedings commenced before the Act came into force are deemed to have been dismissed without costs. The phrase “good faith effort” includes an “honest effort, whether or not that effort is reasonable” (s. 1(1)).
Notably, the Act contains a number of exceptions. Actions that constitute gross negligence are not protected from liability (s. 2(1)(b)). Further, businesses are not exempt from liability if operating when they were required to close under law (s. 3), and they are further not exempt from actions by employees or contractors who are exposed to COVID-19 in the course of or as a result of their employment (s. 4(2)).
Similarly, British Columbia implemented the COVID-19 Related Measures Act and later the COVID-19 (Limits on Actions and Proceedings) Regulation. This legislation states that except in cases of gross negligence, no litigation may be commenced for “prescribed damages” where the action was commenced against a person who was engaged in an essential service, an activity meant to benefit the community, or a business that is carried on for direct or indirect profit or gain. The person must have been acting in accordance with health and emergency guidelines or the person must have reasonably believed that they were acting in accordance with health and emergency guidelines. “Prescribed damages” are defined as those that arise as a result of the person contracting or being exposed to COVID-19.
This legislation is already in effect, as the COVID-19 Related Measures Act was assented to on July 8, 2020. The Regulation was passed in August 2020 and is retroactively in effect to January 1, 2020.
Similarly, New Brunswick recently implemented an order under the Emergency Measures Act. In this order, business proprietors and service providers are required to “take all reasonable steps to minimize the risk of COVID-19 transmission among their employees, patrons and visitors, and must comply with all directives and [all New Brunswick COVID-19] guidelines”. However, it also states that a person is not liable for any damages that result if an individual is exposed to COVID-19 as a result of interacting with the person if at the relevant time, the person was providing an essential service, absent gross negligence.
At the time of drafting this article, it is unclear whether other provinces will implement similar legislation.
Waivers generally:
To protect themselves from liability, individuals or corporations often require patrons to sign waivers of liability before engaging their services. Especially in jurisdictions that do not have protective legislation, we recommend that businesses use waivers to protect against COVID-19 related liability.
To have an enforceable waiver, there are three general requirements:
The waiver must be valid, which means that the signatory must have been aware of what he or she was signing. The person presenting the waiver must take “reasonable steps” to bring the waiver to the attention of the signatory, and must not misrepresent the nature of the waiver. Examples of “reasonable steps” include the following:
Make the waiver a separate document, and not buried within another document such as a registration form;
Title the waiver clearly, and make sure the title represents exactly what the document is;
Use bold lettering, indents, brightly-coloured fonts, and highlighting to draw attention to key paragraphs in the waiver;
Clearly identify the party who is to be protected by the waiver, and the party who is waiving their rights;
Create a space for the signatory to initial beside key paragraphs in the waiver to indicate that the signatory has read and understood it;
Draft the waiver in plain English so that it is easy to understand;
Instruct signatories to take their time and carefully read the waiver, and provide sufficient time for the signatory to read the entire waiver;
For paper waivers, ensure the party presenting the waiver is present so that the signatory has opportunity to ask questions about the waiver, and consider creating a document of commonly asked questions for the parties presenting the waiver;
For electronic waivers, include contact information for an individual who will be responsible for answering any questions about the waiver; and
Include a recommendation for the signatory to obtain legal advice, if appropriate in the circumstances.
Failure to draw a signatory’s attention to a waiver of liability clause or form is considered misrepresentation by omission.
The scope of the waiver must be broad enough to cover whatever the business seeks protection from. It should include wording which releases the business from liability for any negligence, breach of contract, or breach of any statutory duty, including any duty of care owed under the Occupier’s Liability Act. In this case, the waiver should also specifically state that the business is exempt from any liability from employees or patrons who contract COVID-19 while participating in the activity which is the subject of the waiver.
The waiver must not be unconscionable, or contrary to public policy. Under this criterion, there are public policy arguments for both parties. The signatory may argue that is unconscionable for an employee or patron to waive their legal right to sue if he or she contracts COVID-19 due to the negligence of the business. Additionally, an employee may have a valid argument that he or she was subjected to economic duress to sign the waiver (i.e. either sign the waiver or risk becoming unemployed).
However, there is also a public policy argument, reflected in recent legislation, that to permit such lawsuits would have a ‘floodgates effect’, opening businesses up to the risk of (potentially significant) litigation, or alternatively disincentivizing them from operating at all. This could have a devastating effect on the Canadian economy, which has already taken a significant hit due to the COVID-19 pandemic. As this particular issue has not yet been litigated, it is unclear whether such a waiver will be enforceable or not. This is certainly a risk that businesses should be aware of.
Waivers on behalf of minors:
A commonly asked question is whether people who have not yet reached the age of majority (18) can be bound by a waiver. In other words, if children under the age of 18 engage in activities on the business’ premises, can the business rely on a waiver of liability signed by the minor, their parent(s), or both?
In British Columbia waivers signed by parents on behalf of minor children are unenforceable. The Infants Act states that a contract entered into by a minor is unenforceable unless affirmed or performed upon the child turning 18, or not repudiated by that child within a year of their 18th birthday. A waiver, as a contractual term, is therefore not binding on a minor in British Columbia. Further, a waiver signed by a child’s parent is also unenforceable in British Columbia, as decided in 2009 by the Supreme Court of British Columbia in Wong (Litigation Guardian of) v Lok’s Martial Arts Centre Inc.
This particular issue has not been litigated in other Canadian provinces, making it a live issue in all provinces in Canada besides British Columbia. Therefore, it is also presently unknown whether parents can waive their child’s right to sue if the child contracts COVID-19 at school or at any of the child’s activities. Despite this uncertainty, we recommend that both parents (and minors who can reasonably read and understand what they are signing) sign the waiver or acknowledgement of risk form, as the minor’s signature may still carry some weight, particularly as they near the age of majority. While a waiver may be unenforceable against a minor at law, it is nevertheless a useful tool in a business’ toolkit in defending claims brought by patrons who contracted COVID-19 on the business’ premises.
Indemnification Agreements and Acknowledgement of Risk forms:
In signing an indemnity agreement, the signatory agrees to indemnify the business for any losses the business suffers if the signatory (or the child on whose behalf they are signing) contracts COVID-19 and successfully sues the business. There have been mixed opinions as to the effectiveness of indemnity agreements and whether such an agreement is contrary to public policy, especially as these relate to children. For example, parents most often file lawsuits on behalf of their minor children, and they may be dissuaded from doing so if there is a risk that they will be liable to indemnify the business. This would not be in the best interest of the child and may be contrary to public policy. As with waivers, it is presently unclear whether such an indemnity clause would be enforceable, but again, it is recommended that businesses utilize indemnity agreements as another tool in their toolkit.
An acknowledgement of risk form may offer some protection as well. By signing an acknowledgment of risk form, signatories represent that they are aware that by engaging the services of the business, interacting with its employees, or attending its premises, they are increasing their risk of contracting COVID-19. Such an acknowledgement should outline the potential effects of COVID-19, including death. It should be structured to state that the business assumes no responsibility for the safety of the patron and that the patron does not expect them to ensure their safety. Should the patron later sue the business, this form could provide a basis for a business’ “voluntary assumption of risk” defence, or at least a contributory negligence defence.
Conclusion:
First, we recommend that businesses speak to their insurers to determine whether they have coverage for COVID-19-related liabilities. We encourage businesses to comply with any requirements provided by their insurers.
We also recommend that waivers, indemnification forms and acknowledgments of risk should be developed to specifically include risks relating to the contraction of COVID-19. All of these documents, even if potentially unenforceable, may deter parties from suing. We suggest that within these waivers, the business reserve the right to cancel or postpone services or activities due to COVID-19. We also suggest that the waivers require the signatory to comply with all government health guidelines, and allow the business to immediately terminate the participation of any individual who fails to comply with these guidelines. Consider providing pamphlets containing the current guidelines along with the waiver. Lastly, we recommend a clause stating that failure of a party to adhere to the requirements of the waiver constitutes a breach of contract.
Businesses should train their staff and anyone who presents waivers to signatories so that they can answer basic questions about the waiver. This may involve creating a document of commonly asked questions. For electronic waivers, these commonly asked questions could be posted alongside the waiver. We also encourage businesses to direct individuals with more specific questions to an individual or team within the business or otherwise to consult with a lawyer. We also suggest posting a copy of the waiver online or sending it to signatories in advance so that they have time to fully review the document and seek legal advice prior to engaging in the activity.
Regarding waivers for activities hosted by the business we also recommend that the business retain a list of attendees and signed waivers so that these records can be audited. These waivers should be kept on file for a minimum of 2 years following the completion of the activity which is the subject of the waiver (i.e. until the limitation period has expired for potential actions against the business). Waivers signed by minors should be kept longer since limitation periods do not run against a minor. In some cases, the limitation period was temporarily suspended as a result of COVID-19. As such, before destroying any waivers, we recommend that the business obtain legal advice on the limitation period in their jurisdiction.
This is an evolving issue. It certainly appears that some of the new and proposed legislation will protect the good-faith efforts of businesses from claims made by patrons or possibly employees who contract COVID-19. However, even if legislation is enacted in all the provinces, until it is litigated in Court, the law will continue to be unclear in this area. We encourage businesses to implement the waivers discussed in this article, follow all prescribed health guidelines in their jurisdiction, and stay on top of any relevant changes in their jurisdiction’s legislation.
Not Legal Advice: This article is provided solely for information purposes. The information presented does not constitute legal or professional advice and should not be relied upon for such purposes or used as a substitute for legal advice.